Global Spillovers of Taxation in the Online Advertising Market. Theory and Evidence from Facebook

Andrea Lassmann, Federica Liberini, Antonio Russo, Ángel Cuevas and Rubén Cuevas

No 8149, CESifo Working Paper Series from CESifo

Abstract: We analyze the effect and welfare implications of taxing multinational digital platforms on the global online advertising market. Using a novel dataset on advertising prices and product preferences of users from Facebook in OECD countries, jointly with international trade data, we show that an increase in the platform’s corporate tax rate in some countries had a strong effect on advertising prices therein. The increase spills over to other countries through pre-existing international trade linkages. This result is consistent with our theoretical model, which shows that a digital platform reduces the supply of ads to advertisers from countries where taxation increases.

Keywords: online advertising; multi-sided platforms; tax incidence; product interests; international trade (search for similar items in EconPapers)
JEL-codes: F15 F23 H22 H25 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-int, nep-pay, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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